Mediating Influences on the Relationsmp between Market Orientation and Profitability in Small Industrial Firms

Abstract

This research sought to investigate potential mediating influences on the market orientation-profitability relationship in a model which operationalizes performance as a multi-dimensional construct.The conclusions are based on a structural equation model analysis of the responses of 160 small industrial firms responding to a mailed survey. this research suggests that market orientation directly and significantly influences the firm effectiveness dimension of performance, composed of new product success, customer retention, and relative product quality. Firm effectiveness is found to be a mediating variable between market orientation and the performance dimensions of sales growth/market share and profitability.